WARNING: Improperly drafted trusts can cost seniors thousands

Many seniors are desperate to find a way to pay for rising long term care costs. One of the programs that provide a tremendous benefit to seniors is VA Improved Pension. VA pension provides cash benefits to veterans and their surviving spouses from $1,159.00 to $1,880.00 a month to cover the cost of long term care benefits. For many seniors, they need to do some estate planning to qualify for the benefit, as they have more assets in their name than the VA permits for someone to receive pension. There are legal and ethical methods of reducing assets to qualify for VA Pension, which is often part of a long term care strategy prepared by an experienced elder law attorney.
Unfortunately, there are professionals that are taking advantage of the senior population by promising benefits for long term care that the senior will never receive. Our office saw the third case we have seen in the last two years recently, when the daughter of a couple receiving VA benefits came into the office to have her parents’ trust updated. Upon review of the trust, I found that there were provisions in the trust that would preclude the parents from receiving VA benefits. Under VA regulations, if a trust has language allowing certain types of distributions to be made to those applying for VA benefits, the assets in the trust will count for VA purposes and disqualify the seniors from receiving benefits.
For our particular client, this was a horrific result. Her parents are going to be required to pay the VA back for benefits they received over 5.5 years that they were not eligible to receive the benefits due to the defective trusts. This will result in the parents returning over $135,000.00 to the VA. Making matters worse, the clients’ thought they were planning for nursing home Medicaid by transferring assets out of their name five years before a need for nursing home Medicaid arose. But, due to the deficiencies of the trust, there was not a transfer of money for Medicaid purposes, and therefore the clock did not start on the Medicaid five year waiting period.
Sadly, this irreparable harm could have easily been avoided. When an experienced elder law attorney plans for long term care, legal, efficient, and ethical techniques are used to establish long term care programs. While the initial fees to work with an experienced attorney can be higher than some of the veterans groups offering help, the investment is worth knowing that the seniors you care for receive the long term care benefits they are entitled and never face owing a six figure sum to the government.